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Palo Alto Networks CEO: Consolidation thwarts innovation

Illustration: Axios Visuals

At next month's RSA cybersecurity conference, around 600 cybersecurity vendors will be in the expo halls vying for visitor dollars. By next year, many of them will be out of business; others will be sold.

Quoted: "I believe there will be a lot of consolidation in the industry and that it's exactly the wrong thing to do," Mark McLaughlin, chair and chief executive of Palo Alto Networks, told Axios.

"No one company can create all the innovation": Cybersecurity isn't like word processing — most companies can't get by with a single vendor or single program to perform all the functions it requires. The market is flooded with tools and services primarily designed to do single functions, each of which competes for security staffs' attention.

But McLaughlin worries single vendors either must be so large that they lack agility or so small that they lack features. "No one company can create all the innovation," he said.

Consolidating platforms, not companies: McLaughlin has a horse in this race. Palo Alto Networks is launching an app store-type model allowing all vendors to operate within the Palo Alto framework.

If it succeeds, it will fundamentally change how companies, particularly smaller ones, compete in this space. On the one hand, for better and worse, it narrows the scope of a company's control over its own environment. On the other, companies won't need to lose focus of their strengths to compete. "You should pay attention to what you're good at," he said.